Why does a nation experience increasing opportunity cost?
A) As the nation moves from a production point within the PPF to one on the PPF, opportunity costs increase.
B) As the nation moves from a production point within the PPF to another point also within the PPF, opportunity costs increase.
C) When the amount of resources increases, the opportunity cost of all goods and services increases.
D) Resources are not equally productive in producing different kinds of goods and services.
E) Because the nation cannot produce at the unattainable production points that lie beyond the PPF.

Question

Quizplus · Accepted Answer

Resources are not equally productive in producing different kinds of goods and services, which means as a nation reallocates resources from one product to another, the resources are not as efficiently used, leading to increasing opportunity costs. This is a fundamental concept in economics related to the law of increasing opportunity costs, which states that as production of a good expands, the opportunity cost of producing an additional unit of that good increases. This is because resources are not perfectly adaptable to the production of all goods.

Why Does a Nation Experience Increasing Opportunity Cost